How common is ACH fraud on checking accounts?

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MikeT
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How common is ACH fraud on checking accounts?

Post by MikeT » Sat Aug 20, 2016 4:21 pm

Since my account number and routing number is on every check I've written, and since no PIN is need for electronic (ACH) transactions, how common is unauthorized transactions on a checking account?

Thanks,
Mike

PS: Thanks to all those who answered my other two threads on credit card fraud.

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dm200
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Re: How common is ACH fraud on checking accounts?

Post by dm200 » Sat Aug 20, 2016 4:25 pm

MikeT wrote:Since my account number and routing number is on every check I've written, and since no PIN is need for electronic (ACH) transactions, how common is unauthorized transactions on a checking account?
Thanks,
Mike
PS: Thanks to all those who answered my other two threads on credit card fraud.
I cannot cite a "percentage" risk, but ACH fraud is not uncommon. The ACH system is inherently insecure. The good news is that if you catch ACH "problems" quickly, you are near certain to get your money back.

Watch your accounts online and report ANY unknown ach immediately. One "technique" for such fraud is to put through small ACH withdrawal(s), then if not kicked back - they assume nobody is watching and put through a big hit.

One organization I am affiliated with has about $1 Million going through its bank accounts each year. Someone or some entity to which it disbursed a small check put through a fraudulent ACH transfer. No loss - BUT a real "incomvenience". The organization opened an additional checking account just for this type of smaller disbursements (these disbursements often go to potentially higher risk payees) and keep only a smaller balance.
Last edited by dm200 on Sat Aug 20, 2016 5:50 pm, edited 1 time in total.

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Re: How common is ACH fraud on checking accounts?

Post by patrick » Sat Aug 20, 2016 4:30 pm

It's never happened to me (fingers crossed!)

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Kenster1
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Re: How common is ACH fraud on checking accounts?

Post by Kenster1 » Sat Aug 20, 2016 5:08 pm

ACH fraud: Why criminals love this con
http://www.csoonline.com/article/212583 ... s-con.html
Aug, 2010

Fraud involving the Automated Clearing House (ACH—hence the term ACH fraud) Network, which is used by financial institutions to handle direct deposits, checks, bill payments and cash transfers between businesses and individuals, is becoming an increasingly popular way for hackers to siphon money out of the bank accounts of unsuspecting victims.

Fraudsters only need two pieces of information to pull off ACH fraud; a checking account number and a bank routing number. They typically obtain the information with a targeted phishing email that tricks the victim into running malicious software which then allows criminals to install keylogging software and steal bank account passwords.

How pervasive is this crime? According to a report late last year from the FBI, there has been approximately $100 million in attempted losses due to ACH fraud as of October 2009. The FBI reports it is seeing several new victim complaints and cases opened every week.
Last edited by Kenster1 on Sat Aug 20, 2016 5:18 pm, edited 1 time in total.
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Re: How common is ACH fraud on checking accounts?

Post by Kenster1 » Sat Aug 20, 2016 5:17 pm

PATCO ACH Fraud Ruling Reversed
http://www.bankinfosecurity.com/patco-a ... sed-a-4919
A federal appeals court has reversed a lower court's ruling in the ACH/wire fraud dispute between PATCO Construction Inc. and the former Ocean Bank, now People's United.

In a decision issued July 3, the First Circuit Court of Appeals in Boston ruled in favor of PATCO, reversing a district court's 2011 judgment that favored the bank, and further recommended that the two parties pursue an out-of-court settlement of the case.

The 43-page ruling describes the bank's security procedures as "commercially unreasonable," saying the institution should have detected and stopped the fraudulent transactions that drained more than $500,000 from PATCO's commercial account in 2009.

The ruling goes on to state Ocean Bank actually increased the Maine-based construction company's fraud risk by relying on what the court calls a "one-size-fits-all" approach to monitoring and authenticating high-dollar transactions.
The PATCO/Ocean Bank dispute is one of two landmark court cases revolving around which party bears responsibility when financial losses result from online compromises. The other case involves Michigan-based Experi-Metal Inc. and Comerica Bank. Like PATCO, EMI saw more than $560,000 drained from its account after fraudulent transactions exceeding $1.9 million were approved by Comerica. In 2009, EMI sued Comerica and won.
.
Five Indicted in Californian City ACH Fraud Case
http://news.softpedia.com/news/Five-Ind ... 3571.shtml
Five individuals who played money mule roles in an operation involving the theft of $450,000 from a bank account belonging to the City of Carson, CA, have been indicted. A computer trojan was used to infect the laptop of the city treasurer in order to steal the information necessary to carry out this attack.

Automated Clearing House (ACH) fraud has become a preferred method for cybercriminals to steal large sums of money from businesses and organizations. Additionally, because of the hit-and-run nature of these complex attacks, they have proven hard to prevent.

An ACH fraud operation starts with cybercriminals customizing a computer Trojan, which would give them the ability to hijack online banking credentials from an infected computer. Their goal is to infect key people with access to a company or organization's bank accounts and funds with it. In this case, the malware used is a trojan called Talex and the targeted individual was City of Carson treasurer Karen Avilla.
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Re: How common is ACH fraud on checking accounts?

Post by tfb » Sat Aug 20, 2016 6:04 pm

MikeT wrote:Since my account number and routing number is on every check I've written, and since no PIN is need for electronic (ACH) transactions, how common is unauthorized transactions on a checking account?
Not very common. You have 60 days from the statement close date to dispute unauthorized transactions. It's unconditionally reversed. The bank that initiated the withdraw eats it.
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Re: How common is ACH fraud on checking accounts?

Post by likegarden » Sat Aug 20, 2016 6:21 pm

Since 1968 it has never happened to us.

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Re: How common is ACH fraud on checking accounts?

Post by Mudpuppy » Sun Aug 21, 2016 1:16 am

ACH fraud happens less often on personal accounts than one might expect, given how easy it is to perpetrate. From my non-scientific perspective, I've seen more reports of debit card fraud against a personal account than ACH fraud.

The impact of fraud on business accounts is far more severe than the impact of fraud on personal accounts, simply because personal accounts have more regulatory protections and "safety nets" when fraud does happen. If a personal account gets hit with fraud and the bank cannot claw back the transaction, then the bank usually has to restore the funds to the personal account and ends up covering the loss.

Business accounts on the other hand have very few regulatory protections. In most circumstances, banks do not have to restore fraudulently withdrawn funds unless they can claw back the transactions. Essentially, businesses are expected to carry their own fraud loss insurance. Both the PATCO and City of Carson articles quoted by Kenster1 involved business accounts.

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Re: How common is ACH fraud on checking accounts?

Post by Kenster1 » Sun Aug 21, 2016 12:10 pm

Same-Day ACH Payments Will Stress Bank Anti-Fraud Efforts
http://www.paymentssource.com/news/payt ... 036-1.html
NACHA's adoption of same-day payment, or ACH (Automated Clearing House) payment - allows businesses and customers to benefit from receiving same-day transaction processing, though with security risk.

ACH payment allows for quicker access to payroll, account transactions and faster bill payments. However, banks and other financial institutions will need to review thousands of additional transactions per day, leading to a significant increase in staff and operational costs--not to mention the increased potential for fraudulent activity due to sheer volume and rapidness of review.

NACHA’s new rule, which will go into effect September 2016, will give the US three years to move to faster payments, easing the implementation process and allowing financial institutions the time they need to efficiently scale up to be ready for this new era of payments.
When the U.K. moved to faster payments in 2008, U.K. banks saw a sharp spike in fraud as criminals took advantage of the reduced time frames for effective risk management, according to Aite Group.

Whereas settling a payment before the new rule would usually require a minimum of one day to a maximum of four days, the new time frame may now be as short as only two hours. It will take existing fraud teams approximately 4.5 hours to review all risky transactions, which means finishing the review a full two hours after the mandated time for processing. The additional cost of labor to check the same number of payments in a far shorter period will be significant – as much as 45% more - resulting in a massive cost on the operational center. While today approximately 20% of sessions are done in the morning hours, sessions are expected to grow to 50% during these early hours since many people will want to take advantage of same day payments and submit just before the deadline. As a result, it is expected that there will be 150% uptick once this rule goes into effect.
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Re: How common is ACH fraud on checking accounts?

Post by JDCarpenter » Sun Aug 21, 2016 1:24 pm

Interesting question. Note that the the ACH system, in the first quarter of 2016, processed 5.01 BILLION transactions (slightly more debits than credits) adding up to $10.6 TRILLION. See https://www.nacha.org/system/files/reso ... r-2016.pdf This is more than 20 times the amount being moved by the top 11 credit card issuers combined. http://fusion.net/story/309392/stop-using-paper-checks/ Given that volume, the incidence of fraud is pretty low.

But, see that fusion article for a look at the creaky system behind ACH (even before same day settlement is imposed). Burden is definitely on the account holder to keep an eye on things.
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dm200
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Re: How common is ACH fraud on checking accounts?

Post by dm200 » Sun Aug 21, 2016 5:01 pm

Let me add a few more comments.

ACH (in both directions) do not have to be checking accounts. Savings accounts can be involved.

One "flaw" in the ACH system are these intermediary payment/billing processors. These folks just pass along the information (routing number) without requiring the requesting person/entity to supply/match both the routing number and the name of the bank or credit union.

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Re: How common is ACH fraud on checking accounts?

Post by MikeT » Sun Aug 21, 2016 5:50 pm

Wow! Thank you for the link to the article.

Based on this thread, and the fact that my two different credit cards of mine got compromised in the last 4 months, I just turned on email notifications for ALL transactions, ALL accounts (checking, savings, credit cards).

It's annoying, but at this point, it feels warranted.

It's a jungle out there!

Mike

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Re: How common is ACH fraud on checking accounts?

Post by knightrider » Tue Aug 21, 2018 12:00 pm

tfb wrote:
Sat Aug 20, 2016 6:04 pm
Not very common. You have 60 days from the statement close date to dispute unauthorized transactions. It's unconditionally reversed. The bank that initiated the withdraw eats it.
What happens if you catch it after 60 days? Are banks firm on that date? The reason is I sometimes don't check statements every month . I have too many accounts and checking every month takes a lot of time to login to the websites and such..

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Re: How common is ACH fraud on checking accounts?

Post by dm200 » Tue Aug 21, 2018 12:07 pm

knightrider wrote:
Tue Aug 21, 2018 12:00 pm
tfb wrote:
Sat Aug 20, 2016 6:04 pm
Not very common. You have 60 days from the statement close date to dispute unauthorized transactions. It's unconditionally reversed. The bank that initiated the withdraw eats it.
What happens if you catch it after 60 days? Are banks firm on that date? The reason is I sometimes don't check statements every month . I have too many accounts and checking every month takes a lot of time to login to the websites and such..
It all depends. Even if not required, many banks and credit unions will try to get the money back. Sometimes they are successful and sometimes not.

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Re: How common is ACH fraud on checking accounts?

Post by arf30 » Tue Aug 21, 2018 12:20 pm

Nobody in my extended family has experienced it, but I always assumed it was common given that anyone with a routing and account number can transfer money out of an account.

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Re: How common is ACH fraud on checking accounts?

Post by dm200 » Tue Aug 21, 2018 12:23 pm

arf30 wrote:
Tue Aug 21, 2018 12:20 pm
Nobody in my extended family has experienced it, but I always assumed it was common given that anyone with a routing and account number can transfer money out of an account.
Yes - I am in this business and the ACH "system" is very, very insecure. The good news, though, is that finding problems quickly will prevent actual losses.

A lot of this kind of fraud (as well as debit/credit card fraud) is done by close family and friends.

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Re: How common is ACH fraud on checking accounts?

Post by dm200 » Tue Aug 21, 2018 12:25 pm

An organization I am familiar with was hit by fraud from a small check written for emergency assistance. The organization suffered no financial loss - eventually - but had to close the checking account and start a new one. To reduce this from happening again, they now have one large operational account (pay salaries, bills, etc) and a separate, smaller, emergency assistance checking account.

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Re: How common is ACH fraud on checking accounts?

Post by unclescrooge » Tue Aug 21, 2018 12:50 pm

MikeT wrote:
Sat Aug 20, 2016 4:21 pm
Since my account number and routing number is on every check I've written, and since no PIN is need for electronic (ACH) transactions, how common is unauthorized transactions on a checking account?

Thanks,
Mike

PS: Thanks to all those who answered my other two threads on credit card fraud.
I had my savings account drained via fraudulent ACH.

Strange, since it's never been publicly disclosed.

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Re: How common is ACH fraud on checking accounts?

Post by megabad » Tue Aug 21, 2018 12:53 pm

MikeT wrote:
Sat Aug 20, 2016 4:21 pm
Since my account number and routing number is on every check I've written, and since no PIN is need for electronic (ACH) transactions, how common is unauthorized transactions on a checking account?

Thanks,
Mike

PS: Thanks to all those who answered my other two threads on credit card fraud.
I treat my main expense checking account like a wallet/purse--never put more in there than I can afford to lose. At least not for more than a day. As long as you opt out of ACH overdrafts, fraudsters going after any appreciable amount via ACH will get declined. Heck I even had a certain notorious cable company get declined when they autodrafted 10 times my correct bill amount one month. Gosh I write a physical check only once in a blue moon now anyway. I actually pay extra fees to use credit cards for most bills. Of course I get about 80% of the fee back in cashback usually so I think it is worth it for the protection.

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Re: How common is ACH fraud on checking accounts?

Post by Earl Lemongrab » Tue Aug 21, 2018 1:35 pm

knightrider wrote:
Tue Aug 21, 2018 12:00 pm
tfb wrote:
Sat Aug 20, 2016 6:04 pm
Not very common. You have 60 days from the statement close date to dispute unauthorized transactions. It's unconditionally reversed. The bank that initiated the withdraw eats it.
What happens if you catch it after 60 days? Are banks firm on that date? The reason is I sometimes don't check statements every month . I have too many accounts and checking every month takes a lot of time to login to the websites and such..
You should set up alerts for any activity on your account.

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Re: How common is ACH fraud on checking accounts?

Post by 2015 » Tue Aug 21, 2018 2:35 pm

I combat ACH (and other types of) fraud on all my accounts with a plethora of alert triggers, via text and email.

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Re: How common is ACH fraud on checking accounts?

Post by Grogs » Tue Aug 21, 2018 2:58 pm

I had a fraudulent ACH charge on an account once. It was an account I rarely ever use anymore, and I keep less than $50 in it. I noticed something was amiss when I logged in and saw the account had gone negative. Someone had tried to pay their mortgage from my account, but that payment had bounced because of lack of funds. That triggered an NSF fee, which sent the account negative, which then triggered an overdraft fee. :shock: I called my bank and they reversed the fees within a couple of days. The CR rep told me it was most likely someone had set up automatic payments on a new mortgage and just fat-fingered the account number. There were never any more attempted charges, so he was probably right.

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Re: How common is ACH fraud on checking accounts?

Post by S_Track » Tue Nov 05, 2019 5:20 pm

Can ACH transfers pull from bank savings or money market accounts or just checking accounts? Thanks

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Re: How common is ACH fraud on checking accounts?

Post by HomeStretch » Tue Nov 05, 2019 6:13 pm

S_Track wrote:
Tue Nov 05, 2019 5:20 pm
Can ACH transfers pull from bank savings or money market accounts or just checking accounts? Thanks
Yes, I have initiated pulls via ACH on a savings account and on a money market account thru other financial institutions, from federal and state tax payment sites, etc.

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Re: How common is ACH fraud on checking accounts?

Post by unclescrooge » Tue Nov 05, 2019 6:23 pm

megabad wrote:
Tue Aug 21, 2018 12:53 pm
MikeT wrote:
Sat Aug 20, 2016 4:21 pm
Since my account number and routing number is on every check I've written, and since no PIN is need for electronic (ACH) transactions, how common is unauthorized transactions on a checking account?

Thanks,
Mike

PS: Thanks to all those who answered my other two threads on credit card fraud.
I treat my main expense checking account like a wallet/purse--never put more in there than I can afford to lose. At least not for more than a day. As long as you opt out of ACH overdrafts, fraudsters going after any appreciable amount via ACH will get declined. Heck I even had a certain notorious cable company get declined when they autodrafted 10 times my correct bill amount one month. Gosh I write a physical check only once in a blue moon now anyway. I actually pay extra fees to use credit cards for most bills. Of course I get about 80% of the fee back in cashback usually so I think it is worth it for the protection.
My savings account was drained via ACH. The account information was never public to begin with so I don't know how they got that information.

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Re: How common is ACH fraud on checking accounts?

Post by megabad » Tue Nov 05, 2019 7:08 pm

unclescrooge wrote:
Tue Nov 05, 2019 6:23 pm
My savings account was drained via ACH. The account information was never public to begin with so I don't know how they got that information.
You aren't going to like my answer, but I might suggest the most common cause is probably bank error. A bit scary if that is the reason though. Also, old banks sometimes sequentially number accounts, which is a bit laughable now but it is possible some banks never updated. If your bank still does this, switch banks. I think the last time I saw it was in the 80s. Account numbers should be long and basically random, as if that needs to be said...

Obviously really old banks would do things like have the first account be #1 and then the second #2 etc. I had a few separate old accounts with a bank years ago and noticed that the numbers for the checking and savings were sequential and thought boy that is really dumb. It used to be very very common though. As in, every bank did it. With the advent of computers, there is no excuse for this today as it pretty much makes stealing from accounts via ACH childs play and just creates more cost for all of us when banks have to investigate and restore the funds.

The best/easiest suggestion is to basically never use ACH or checks for anything from your account. It really isn't necessary for 99% of individuals. At a minimum, if you do this and all of a sudden someone drains your account via ACH illegally, it should trip every alarm possible at the bank (since you never use ACH or checks outbound) and hopefully they would stop it.

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Re: How common is ACH fraud on checking accounts?

Post by Northern Flicker » Tue Nov 05, 2019 7:38 pm

I’m not an attorney, but this is my understanding:

In the court case cited above the bank’s customer was a business, so had to sue under the Uniform Commercial Code (UCC). Consumer protection is stronger (Federal Reserve Regulation E). However, if you initiate an ACH or wire transfer using a paper form and regular signature rather than through an electronic/digital system, then Reg E does not apply and you would have to sue under the UCC protections.

The clocks for challenging errors or fraudulent activity are based on statements issue dates.
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Re: How common is ACH fraud on checking accounts?

Post by JBTX » Tue Nov 05, 2019 8:03 pm

megabad wrote:
Tue Nov 05, 2019 7:08 pm
unclescrooge wrote:
Tue Nov 05, 2019 6:23 pm
My savings account was drained via ACH. The account information was never public to begin with so I don't know how they got that information.
You aren't going to like my answer, but I might suggest the most common cause is probably bank error. A bit scary if that is the reason though. Also, old banks sometimes sequentially number accounts, which is a bit laughable now but it is possible some banks never updated. If your bank still does this, switch banks. I think the last time I saw it was in the 80s. Account numbers should be long and basically random, as if that needs to be said...

Obviously really old banks would do things like have the first account be #1 and then the second #2 etc. I had a few separate old accounts with a bank years ago and noticed that the numbers for the checking and savings were sequential and thought boy that is really dumb. It used to be very very common though. As in, every bank did it. With the advent of computers, there is no excuse for this today as it pretty much makes stealing from accounts via ACH childs play and just creates more cost for all of us when banks have to investigate and restore the funds.

The best/easiest suggestion is to basically never use ACH or checks for anything from your account. It really isn't necessary for 99% of individuals. At a minimum, if you do this and all of a sudden someone drains your account via ACH illegally, it should trip every alarm possible at the bank (since you never use ACH or checks outbound) and hopefully they would stop it.
I'm not sure how you never use ach or checks. Not everyone takes credit cards.

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Re: How common is ACH fraud on checking accounts?

Post by S_Track » Tue Nov 05, 2019 8:28 pm

JBTX wrote:
Tue Nov 05, 2019 8:03 pm
megabad wrote:
Tue Nov 05, 2019 7:08 pm
unclescrooge wrote:
Tue Nov 05, 2019 6:23 pm
My savings account was drained via ACH. The account information was never public to begin with so I don't know how they got that information.
You aren't going to like my answer, but I might suggest the most common cause is probably bank error. A bit scary if that is the reason though. Also, old banks sometimes sequentially number accounts, which is a bit laughable now but it is possible some banks never updated. If your bank still does this, switch banks. I think the last time I saw it was in the 80s. Account numbers should be long and basically random, as if that needs to be said...

Obviously really old banks would do things like have the first account be #1 and then the second #2 etc. I had a few separate old accounts with a bank years ago and noticed that the numbers for the checking and savings were sequential and thought boy that is really dumb. It used to be very very common though. As in, every bank did it. With the advent of computers, there is no excuse for this today as it pretty much makes stealing from accounts via ACH childs play and just creates more cost for all of us when banks have to investigate and restore the funds.

The best/easiest suggestion is to basically never use ACH or checks for anything from your account. It really isn't necessary for 99% of individuals. At a minimum, if you do this and all of a sudden someone drains your account via ACH illegally, it should trip every alarm possible at the bank (since you never use ACH or checks outbound) and hopefully they would stop it.
I'm not sure how you never use ach or checks. Not everyone takes credit cards.
Doesn't online bill pay use ach?

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Re: How common is ACH fraud on checking accounts?

Post by S_Track » Tue Nov 05, 2019 8:51 pm

Hi All,
Looking for some advice. A friend of mine (who has health issues) called and said her bank account had been compromised. There are many unknown charges going back about 4 months. The charges are numerous but all < $1K and mostly to what appears to be credit card accounts. She was in touch with the bank fraud department, they froze her checking account and will issue new checks and account number and look into retrieving the lost funds. They encouraged her to file a police report. Interestingly the bank gave her a name of someone she did business with (health care agency) a few months back for short period. The details are fuzzy but somehow the bank thought this party might be involved. I am going to call the fraud department back with her and see if I can find out more information but looking here for any advice or specific steps to take.
Thanks

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unclescrooge
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Re: How common is ACH fraud on checking accounts?

Post by unclescrooge » Tue Nov 05, 2019 10:15 pm

JBTX wrote:
Tue Nov 05, 2019 8:03 pm
megabad wrote:
Tue Nov 05, 2019 7:08 pm
unclescrooge wrote:
Tue Nov 05, 2019 6:23 pm
My savings account was drained via ACH. The account information was never public to begin with so I don't know how they got that information.
You aren't going to like my answer, but I might suggest the most common cause is probably bank error. A bit scary if that is the reason though. Also, old banks sometimes sequentially number accounts, which is a bit laughable now but it is possible some banks never updated. If your bank still does this, switch banks. I think the last time I saw it was in the 80s. Account numbers should be long and basically random, as if that needs to be said...

Obviously really old banks would do things like have the first account be #1 and then the second #2 etc. I had a few separate old accounts with a bank years ago and noticed that the numbers for the checking and savings were sequential and thought boy that is really dumb. It used to be very very common though. As in, every bank did it. With the advent of computers, there is no excuse for this today as it pretty much makes stealing from accounts via ACH childs play and just creates more cost for all of us when banks have to investigate and restore the funds.

The best/easiest suggestion is to basically never use ACH or checks for anything from your account. It really isn't necessary for 99% of individuals. At a minimum, if you do this and all of a sudden someone drains your account via ACH illegally, it should trip every alarm possible at the bank (since you never use ACH or checks outbound) and hopefully they would stop it.
I'm not sure how you never use ach or checks. Not everyone takes credit cards.
Other than depositing and withdrawing cash, how do move money in and out of the account without checks out ACH?
Wire only?

toomuchRE
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Re: How common is ACH fraud on checking accounts?

Post by toomuchRE » Tue Nov 05, 2019 10:20 pm

Put the $$$ in online bank like Ally or discover and put a HOLD on withdrawal without phone authorization....ACH wont work even if you initiate it..

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Re: How common is ACH fraud on checking accounts?

Post by Katietsu » Wed Nov 06, 2019 5:48 am

unclescrooge wrote:
Tue Nov 05, 2019 10:15 pm
JBTX wrote:
Tue Nov 05, 2019 8:03 pm
megabad wrote:
Tue Nov 05, 2019 7:08 pm
unclescrooge wrote:
Tue Nov 05, 2019 6:23 pm
My savings account was drained via ACH. The account information was never public to begin with so I don't know how they got that information.
You aren't going to like my answer, but I might suggest the most common cause is probably bank error. A bit scary if that is the reason though. Also, old banks sometimes sequentially number accounts, which is a bit laughable now but it is possible some banks never updated. If your bank still does this, switch banks. I think the last time I saw it was in the 80s. Account numbers should be long and basically random, as if that needs to be said...

Obviously really old banks would do things like have the first account be #1 and then the second #2 etc. I had a few separate old accounts with a bank years ago and noticed that the numbers for the checking and savings were sequential and thought boy that is really dumb. It used to be very very common though. As in, every bank did it. With the advent of computers, there is no excuse for this today as it pretty much makes stealing from accounts via ACH childs play and just creates more cost for all of us when banks have to investigate and restore the funds.

The best/easiest suggestion is to basically never use ACH or checks for anything from your account. It really isn't necessary for 99% of individuals. At a minimum, if you do this and all of a sudden someone drains your account via ACH illegally, it should trip every alarm possible at the bank (since you never use ACH or checks outbound) and hopefully they would stop it.
I'm not sure how you never use ach or checks. Not everyone takes credit cards.
Other than depositing and withdrawing cash, how do move money in and out of the account without checks out ACH?
Wire only?
I think they are trying to say to never give your routing and account number to anyone. Online bill pay, for instance, at most banks does not divulge the checking account number to the payee.

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Re: How common is ACH fraud on checking accounts?

Post by samsoes » Wed Nov 06, 2019 6:34 am

Katietsu wrote:
Wed Nov 06, 2019 5:48 am
I think they are trying to say to never give your routing and account number to anyone. Online bill pay, for instance, at most banks does not divulge the checking account number to the payee.
That depends. When using online bill pay, and the payee can't receive electronic payments, they are sent a check by the bank's bill pay service. My bank issues these checks with my actual checking routing and account numbers.

Some banks use a third party bill pay service and paper checks have a different account number. When initiating an online bill payment to a paper check recipient, if your account is debited when the check clears, it likely has your actual checking account number. If the account is debited when you initiate the payment, they likely use a third party service which has different account information, usually from a different bank.
Last edited by samsoes on Wed Nov 06, 2019 6:36 am, edited 1 time in total.
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Re: How common is ACH fraud on checking accounts?

Post by samsoes » Wed Nov 06, 2019 6:34 am

duplicate post
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Re: How common is ACH fraud on checking accounts?

Post by arf30 » Wed Nov 06, 2019 7:07 am

Someone at work was just hit by this - they pulled 10k out of her rarely touched savings account. The fraud department told her it was likely someone trying random account numbers.

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Re: How common is ACH fraud on checking accounts?

Post by likegarden » Wed Nov 06, 2019 7:13 am

I , we have checking accounts since before 1968 and have never seen any irregularities on those accounts and banks. We also do not use smart phones in finances.

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Re: How common is ACH fraud on checking accounts?

Post by megabad » Wed Nov 06, 2019 10:24 am

unclescrooge wrote:
Tue Nov 05, 2019 10:15 pm
JBTX wrote:
Tue Nov 05, 2019 8:03 pm
I'm not sure how you never use ach or checks. Not everyone takes credit cards.
Other than depositing and withdrawing cash, how do move money in and out of the account without checks out ACH?
Wire only?
Strictly speaking you are right, there are a few items that you likely need to use ACH/checks for. Ironically, the main one I can think of that applies to a large number of people is credit cards. However, the increased risk in that case is almost zero in my opinion because CC companies already have my SS#, BD, and life story. Other than credit cards, maybe mortgages/rent and tax payments and that's it. My opinion on no increased risk also applies there and on transferring money between banks.

Every other merchant I use takes credit cards and I don't see a reason to use one that doesn't. What I should have said was--don't ever use ACH/check with anyone that doesn't already have all your personal info. Paying a stranger or merchant with a check is just needlessly taking on additional risk and I don't need that. It just seems crazy to me to trust strangers with your money, but if you do choose to do this, check your accounts religiously and very frequently since you are strongly disadvantaged by law with very short reporting requirements (compared to credit card protections). At best, you are at the mercy of your bank while they sort out any issues.

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Re: How common is ACH fraud on checking accounts?

Post by House Blend » Wed Nov 06, 2019 10:34 am

unclescrooge wrote:
Tue Nov 05, 2019 6:23 pm
My savings account was drained via ACH. The account information was never public to begin with so I don't know how they got that information.
I've had a number of weird things happen in my bank accounts over the years. All of them have been bank errors or 3rd party errors in one form or another, not fraud. The weirdest one yet, and perhaps another cautionary tale for Bogleheads who sneer "I don't write checks so I don't have to worry about their security flaws," happened to me a few months ago:

I have a small savings account at an online bank. Usual regulations: at most 6 transactions per month. No checkwriting privileges, no ATM or debit card. The only thing I can do is ACH transfer in/out between that and external account(s) that I have linked. I login maybe once per month.

One day I login, and see that a check for ~$200 has been debited from the account. Yes, in an account in which checkwriting is not allowed, and checks aren't even issued. I can see the check image. It is a commercial check, not a personal check, from one business to another. My name is not on the check.

The smoking gun is that the 5 digit check number matches my account number after you delete the leading 0s. I also notice that the routing number is for a bank that was swallowed by this bank maybe one or two years ago.

Called customer service. Somewhat surprised that they didn't immediately agree with my diagnosis (nor did they disagree). Much more surprised to learn that savings accounts are vulnerable to checkwriting errors/fraud. Their fraud specialist I spoke to later said that only CDs were immune from that.

Had to file a signed affidavit. It took about two weeks to get the money back.

They also opened a new account for me. The new number has 8 significant digits, not 5. :oops:

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Re: How common is ACH fraud on checking accounts?

Post by megabad » Wed Nov 06, 2019 10:38 am

S_Track wrote:
Tue Nov 05, 2019 8:51 pm
Hi All,
Looking for some advice. A friend of mine (who has health issues) called and said her bank account had been compromised. There are many unknown charges going back about 4 months. The charges are numerous but all < $1K and mostly to what appears to be credit card accounts. She was in touch with the bank fraud department, they froze her checking account and will issue new checks and account number and look into retrieving the lost funds. They encouraged her to file a police report. Interestingly the bank gave her a name of someone she did business with (health care agency) a few months back for short period. The details are fuzzy but somehow the bank thought this party might be involved. I am going to call the fraud department back with her and see if I can find out more information but looking here for any advice or specific steps to take.
Thanks
It is not clear to me from your post whether or not the account has actually been compromised, only that there are unknown charges. If there is suspected fraud/theft, the most important part is immediately formally reporting the situation to the bank and receiving formal written dated confirmation of this. My bank will send an email and a letter. Fraud liability is very low the first 2 days from the incident, vastly increased from 2-60 days, and potentially unlimited after 60 days. If they encouraged her to file a police report and friend believes there is crime and this is allowable in your jurisdiction, I would probably do so personally. Outside of that, it seems like most steps that I would take have been taken and you are at the mercy of the investigation now.

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Re: How common is ACH fraud on checking accounts?

Post by dm200 » Wed Nov 06, 2019 10:41 am

I think they are trying to say to never give your routing and account number to anyone. Online bill pay, for instance, at most banks does not divulge the checking account number to the payee.
1. Routing numbers of banks and credit unions are public information. They appear on bank and credit union web sites - and you cann look them up online.

2. Anyone you write checks to has your account number.

3. Watch and monitor your checking account(s) online.

A religious organization I have various involvements with - has an annual budget of several million dollars a year. Among many other ministries, activities, financial dealings, etc. - it provides a number of small or modest amounts of financial assistance to individuals for various types of "emergency assistance" - such as utilities, rent, food, and so on (long list). In every such situation, it tries to make such assistance checks payable to utility companies, landlords, car lenders, auto repair facilities - and so on. In a few cases, the nature of the "need" does not allow this - so, for example, a "rent" check might be made payable to a roommate - and so on.

Because every one of these checks shows the account number and routing number of the organization, there is a risk of fraudulent ACH payments/withdrawals. Such assistance checks were drawn on the organization's main checking account - through which flowed just about all of the organization's funds. After being "hit" several times (all funds were eventually recovered - with considerable effort - the organization then opened a second checking account for issuing all such "assistance" checks. The balance of this checking account was kept at a level just high enough to cover the monthly checks written - so that any larger "hit" by an ACH withdrawal would be rejected for "insufficient funds". Since, then, the main checking account was then used to write checks payable to generally well known persons (employees) and companies (such as utilities, contracting companies, other charitable and religious entities - the risks of ACH fraud became almost zero.

Probably the biggest "key" to not having a loss due to such ACH "fraud" is catching this immediately. With online access to such accounts today, online monitoring has become very practical.

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Re: How common is ACH fraud on checking accounts?

Post by 3-20Characters » Wed Nov 06, 2019 10:44 am

I consider having alerts on every account a primary responsibility along with strong, unique passwords (password manager) and 2FA. This should be the minimum for anyone these days. On average, I get like 3 alerts from ally for every transaction (1 that it’s been initiated, 1 that’s it’s about to be executed, and 1 when it goes through). I don’t find it annoying. I find it comforting compared to all the junk and phishing emails I get. Ally and my main cc allow me to set alerts for any transaction of $.01 or higher while some banks have limited settings ($100 or more, etc). I also avoid paper checks like the plague because why use them? They offer no advantages compared to cc or ach and they put my account info on paper and float it around. I use all the online systems available to me (pay my estimated taxes through EFTPS, car registration fee though state portal, etc.). Nothing is 100% but so far so good.

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Re: How common is ACH fraud on checking accounts?

Post by JackoC » Wed Nov 06, 2019 10:48 am

unclescrooge wrote:
Tue Nov 05, 2019 6:23 pm
megabad wrote:
Tue Aug 21, 2018 12:53 pm
MikeT wrote:
Sat Aug 20, 2016 4:21 pm
Since my account number and routing number is on every check I've written, and since no PIN is need for electronic (ACH) transactions, how common is unauthorized transactions on a checking account?
I treat my main expense checking account like a wallet/purse--never put more in there than I can afford to lose. At least not for more than a day.
My savings account was drained via ACH. The account information was never public to begin with so I don't know how they got that information.
This is my concern, to the limited extent I am concerned about this issue. We keep balances in checking we could easily (not saying happily) afford to lose in worst case of never getting it back, though AFAIK that's a quite unlikely worst case. And we assume such theft is fairly plausible because the account and routing info goes out to a large number of parties (credit card co's, other auto bill pay recipients, albeit now fairly rare paper checks) and there must be some thieves working at some of those places. Thinking about it perhaps it's strange it doesn't happen more, but has never happened to us in decades and that also factors into my level of concern.

But anyway my relatively greater concern is bank (savings and CD) and money market mutual fund accounts where we keep larger reserves. Those accounts aren't used to pay anybody directly but most have had ACH's sent to/from them at least at some point, the main one feeding our checking account has ACH's to the checking account monthly or more. A few (CD's) have no computer linkage at all, that we can use, deliberately, opened with a paper check to the depository institution, we will have to go get a check from them when CD's mature. Anyway I don't imagine that any of those categories are 100% safe from theft, but my interest and concern would be more how common it is for such 'low profile' accounts to be drained such as happened to you.

However seems by experience this again isn't *so* common, and just having multiple accounts and the relatively unlikelihood of permanent loss makes this general issue not so high on my list of worries. I also do look at the more trafficked accounts fairly often (the main MMMF sends emails to confirm ACH withdrawals) though I don't expect that to provide 100% security for each.

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Re: How common is ACH fraud on checking accounts?

Post by unclescrooge » Wed Nov 06, 2019 10:53 am

House Blend wrote:
Wed Nov 06, 2019 10:34 am
unclescrooge wrote:
Tue Nov 05, 2019 6:23 pm
My savings account was drained via ACH. The account information was never public to begin with so I don't know how they got that information.
I've had a number of weird things happen in my bank accounts over the years. All of them have been bank errors or 3rd party errors in one form or another, not fraud. The weirdest one yet, and perhaps another cautionary tale for Bogleheads who sneer "I don't write checks so I don't have to worry about their security flaws," happened to me a few months ago:

I have a small savings account at an online bank. Usual regulations: at most 6 transactions per month. No checkwriting privileges, no ATM or debit card. The only thing I can do is ACH transfer in/out between that and external account(s) that I have linked. I login maybe once per month.

One day I login, and see that a check for ~$200 has been debited from the account. Yes, in an account in which checkwriting is not allowed, and checks aren't even issued. I can see the check image. It is a commercial check, not a personal check, from one business to another. My name is not on the check.

The smoking gun is that the 5 digit check number matches my account number after you delete the leading 0s. I also notice that the routing number is for a bank that was swallowed by this bank maybe one or two years ago.

Called customer service. Somewhat surprised that they didn't immediately agree with my diagnosis (nor did they disagree). Much more surprised to learn that savings accounts are vulnerable to checkwriting errors/fraud. Their fraud specialist I spoke to later said that only CDs were immune from that.

Had to file a signed affidavit. It took about two weeks to get the money back.

They also opened a new account for me. The new number has 8 significant digits, not 5. :oops:
Luckily Chase made me whole pretty quickly.

But between a Friday and the following Monday, there were dozens of transactions all over the place that totally drained the account.

Luckily I check my balances 5 days a week so I can check for these irregularities.

Are brokerage account immune from this problem? I would think they might be, but if there was fraud it could be more hassle to get restitution.

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Re: How common is ACH fraud on checking accounts?

Post by dm200 » Wed Nov 06, 2019 11:17 am

We have two personal checking accounts - and have never been hit by ach fraud. Generally, as well, we keep small or very small balances in the account for very long. Our monthly flow of funds going through those checking accounts is quite predictable - so usually no need to have much more than $1,000 in there - and the amounts are often much less.

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Re: How common is ACH fraud on checking accounts?

Post by S_Track » Wed Nov 06, 2019 10:16 pm

megabad wrote:
Wed Nov 06, 2019 10:38 am
S_Track wrote:
Tue Nov 05, 2019 8:51 pm
Hi All,
Looking for some advice. A friend of mine (who has health issues) called and said her bank account had been compromised. There are many unknown charges going back about 4 months. The charges are numerous but all < $1K and mostly to what appears to be credit card accounts. She was in touch with the bank fraud department, they froze her checking account and will issue new checks and account number and look into retrieving the lost funds. They encouraged her to file a police report. Interestingly the bank gave her a name of someone she did business with (health care agency) a few months back for short period. The details are fuzzy but somehow the bank thought this party might be involved. I am going to call the fraud department back with her and see if I can find out more information but looking here for any advice or specific steps to take.
Thanks
It is not clear to me from your post whether or not the account has actually been compromised, only that there are unknown charges. If there is suspected fraud/theft, the most important part is immediately formally reporting the situation to the bank and receiving formal written dated confirmation of this. My bank will send an email and a letter. Fraud liability is very low the first 2 days from the incident, vastly increased from 2-60 days, and potentially unlimited after 60 days. If they encouraged her to file a police report and friend believes there is crime and this is allowable in your jurisdiction, I would probably do so personally. Outside of that, it seems like most steps that I would take have been taken and you are at the mercy of the investigation now.
We spoke with the bank fraud department. There were numerous ACH transfers initiated by the same person going back several months to well known national banks. Looked like credit card payments. The bank is pretty confident they will be able to return the funds after the investigation so that is good. Police report has been filed, they took this very seriously and will pursue the matter further.

There is no online profile associated with this account. I was surprised to learn from the bank that is not needed. All the offending person needs is account and routing number. I asked about micro deposits, that was never done, (they looked back in the account history) but is not a requirement anyway according to the bank. I had no idea how fragile the ACH system actually is. Make sure to monitor your accounts and pay attention to alerts. I have never had a problem with my accounts but after learning this I am going to see if my bank can block ACH transfers from my savings account.

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Re: How common is ACH fraud on checking accounts?

Post by Kennedy » Wed Nov 06, 2019 10:49 pm

I once had several hundred dollars taken out of my checking account to pay a cable bill to a company with which I had never done business. The bank promptly credited my account for the money and told me it was probably the result of someone giving an incorrect account number (mine) to the cable company. Seemed weird to me and more like deliberate fraud.

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Re: How common is ACH fraud on checking accounts?

Post by Katietsu » Wed Nov 06, 2019 11:19 pm

Kennedy wrote:
Wed Nov 06, 2019 10:49 pm
I once had several hundred dollars taken out of my checking account to pay a cable bill to a company with which I had never done business. The bank promptly credited my account for the money and told me it was probably the result of someone giving an incorrect account number (mine) to the cable company. Seemed weird to me and more like deliberate fraud.
I would not be so quick to discount a mistake by someone with a similar account number. Before efiling took off, the IRS had to deal with a ridiculous number of returns with a mistake in a SSN. And people have had a horrible time getting money due them back after they supplied the wrong number for a direct deposit.

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Re: How common is ACH fraud on checking accounts?

Post by MotoTrojan » Wed Nov 06, 2019 11:24 pm

arf30 wrote:
Tue Aug 21, 2018 12:20 pm
Nobody in my extended family has experienced it, but I always assumed it was common given that anyone with a routing and account number can transfer money out of an account.
Not at any bank I have used.

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Re: How common is ACH fraud on checking accounts?

Post by SlowMovingInvestor » Thu Nov 07, 2019 7:50 am

I hear horror stories about wire fraud from time to time.

Are consumer protections lower for wiring money than for ACH frauds ? Or is it because wires take so little time, it's hard for consumers to detect and abort them ? Especially for international wires ..

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